The reason for the aggressive recommendation, as distinct from an early call, is based on the belief (as alarming as it may sound at this juncture) that the yield curve has started to price in, expressly or implicitly, some element of US government risk. Professional arbitrage players have already started to redefine the risk-free rate concept, given that 5-year CDS spreads on securities issued by the US government have widened to 48-55 basis points since late last month. These spreads are only headed in one direction, i.e. the 60-80 bps range, as the socialization of banks, insurers and auto makers will lead to increasing uncertainty on the quality of America’s credit 3-5 years into the future.

Just run an imaginary family budget comparison between 2007 and today. And this time try accounting for actual home ownership! Consider:

In 2007, a $250K home with a 30yr fixed mortgage at 6.5% would cost ~ $1,580/mo. Currently, based on national Case Shiller declines, that same house can be bought for ~ 65% of the 2007 price or $163K. Moreover, the same fixed 30 year mortgage interest rate is now only 4% resulting in a monthly cost of $776! The savings in short term ARM loans is even larger (~7% vs. ~2.8%)

The monthly savings are over 50% and, imo, far exceed the increase in cpi on a family budget since 2007.

Schiff and all the other hyper-inflationists are clueless. Bond vigilante idiots. Their understanding of the Fed and reserve bank credit is completely misguided. Imo, they're ignorance is the reason they're given so much media time despite their horrendous track records.

The eCONomic and financial dis-information is willful! It's policy!

GRRRRR!

ps

Ron Paul is another ignoramous with a flawed understanding of the sytem.

People are spending an extra $1.00/week on eggs and saving $60/week on real estate taxes. Behold the hyper-inflation!

When gasoline prices first rose I half-joked to my girlfriend that it was saving her money. She was being much more efficient at planning her trips.

The cost of the gasoline is only part of the expense. Cut back on driving and more expenses vanish.

100k miles @ 25mpg x $4 gasoline = $16k

What's a $16k car worth after 100k miles once maintenance and repairs are subtracted? Not much!

It is probably good that most people don't factor in math. Our entire economy would collapse.

There's no way I would ever drive even 3 miles (one way) to pick up a single carton of eggs. At 50 cents per mile, that's $3 in transportation costs alone (round trip). No thanks! I can think of better uses for that money.

And don't even get me started stopping by a Starbucks to buy a drink while picking up a single carton of eggs.

That would be like my worst grocery shopping nightmare as it would bring the cost per egg up to nearly a dollar, lol.

Disclaimer

I am not a financial advisor. I am not offering investment advice. Although I have attempted to provide accurate information, that's all it is, an attempt. Please do not trust the opinions, numbers, and/or charts of a random anonymous blogger on the Internet. Make your own opinions. Make your own charts. Do your own due diligence. Thank you.